I HOLD THIS TRUTH TO BE SELF-EVIDENT, THAT A DEBT CRISIS CANNOT BE RESOLVED WITH MORE DEBT

Sunday, May 13, 2007

An Empire Needs More Than A Bathtub

A Sunday Sermon...

Decades of government-bashing has left most Americans (and many Europeans) convinced that "big government" is the Devil that lurks behind all societal and economic ills. Starting with Maggie Thatcher, neo-conservative reformists gripped society's attention with one hand tricks (low tax promises), while the other was busy chopping precious institutions and casting them to the free-market pyre. The torch was passed across the sea to Ronald Reagan, who then cunningly sneaked it into Clinton and Blair's hands (though the latter surely would deny it), only to end at the hands of George W. Bush: a social pyromaniac with a craving for ritualistic auto-da-fe's. Like Torquemada running the Jews out of Spain, neo-cons have twisted and expelled from mainstream public discourse the very thought and mention of a socially just state, casting it as sinful and heretical in the very eyes of those most likely to benefit from it. It was a propaganda job admirable for its effectiveness, but perniciously criminal in its results.From the flood of debt that drowns 90% of the people, to the deluge and destruction of New Orleans; from the murder of innocents in Virginia and Columbine, to the internecine massacre of Iraq; from the trickery of Drexel, to the rape of Enron; from the banlieues of Paris, to the ghettos of East LA - the same dangerous ideology threads itself throughout the weft and wove of failed neo-con policies and politics: Government is evil, taxes are theft, the Ayn Rand individual is King and the Adam Smith market Divine.

To all those neo-Norquists out there, I ask a simple question: Do you think Empires can survive - never mind flourish - while drowning inside a bathtub?

And for the Treasury and Fed agonistes: Do you think you can run an Empire on a foreign-issued credit card... forever?

Obviously, No and No. The very survival of the global Empire that is now the United States is dependent on public strength and moral justice. It is time to demolish the rusting, foolish and selfish neo-con ideology and construct anew a rational tax policy, a sane trade policy and a realistic balance between the public and private good.

Otherwise ... we might as well start looking for our own Edward Gibbon.

The current typical tax rate for those who pay (mid/uppser) is 35% fed and 5%-10% state (plus various other taxes). Since you suggest "...a rational tax policy, a sane trade policy and a realistic balance between the public and private good..." you think that part of the solution is an increase in taxing. Just what is fair? I think it's insane that we skim 50% plus as it is. I suppose you want a National Health Care burden...

I think you're on to something here. We need a new version of the French Revolution, where everyone related to an Aristocrat was sent to the Guillotine.

We have to do the same for American society. Let's start by slaughtering every evil person who supported the Iraq war in 2002-3. All of those people are incredibly evil, and the world would be a better place without them.

But most important, in the spirit of the French Revolution, let's murder all the financial managers and executives, and financial advisors. They're the most evil people of all, because for years they've kept making money and didn't bother to warn the rest of us that we were going into debt, and they got us to sign on to subprime loans while they pulled in the dough. And stock brokers -- they let other people invest in the stock market, and they just take a big fat cut.

Yes, Mr. "Hellasious," the way to improve the world is to make sure that the blood of anyone in the field of finance starts flowing in the streets. The more financial manager/advisor blood is flowing through the financial districts of America, London and Tokyo, the better off the world will be.

IMHO true efficient capitalism is reserved to overly efficient societies. An accident in human history. That time has passed for Europe. It is passing for US as well.

Let me bet anyway then that the US will abandon the "laissez-faire" ideology that has permeated America since its inception.

It's about time as America is the more the "land of plenty" no more. Still a gorgeous country, the leading democratic model with a lot to offer to the world but it look like the economic frontier has moved elsewhere.

Welcome to the club of "good old industrial societies"! A reason to become overly pessimistic? I do not think so. But time to start messing seriously about issues such as how :- German people handle their housing, - Dutch people their medical system,- Japan its educational one,- Britain... the red tape.

As the only French citizen posting here, Parisien by the way, let me ferociously oppose however the idea a "Révolution Française" in the US. Nor guillotines by the way.

"It is time to...construct anew a rational tax policy, a sane trade policy and a realistic balance between the public and private good."

The private good is all there is. There is no 'public' good - only individuals. And if the only way to achieve prosperity on a national scale is to compromise individual freedoms, then America should be left to 'decline and fall.'

Incidentally, the opposite is true. Capitalism is what made this country strong in the first place and the lack of which is weakening it now. You advocate a 'balance between the private and public good,' which is nothing less than socialism. A move down that path will destroy what is left of this country.

How about a rational tax policy, like reducing or eliminating taxes on labor and replcing lost revenue with taxes on externalities like pollution, traffic congestion, parking, resource extraction. We'd increase everyone's take-home pay while increasing overall welfare by improving the efficiency of the economy. A free lunch out there waiting to be eaten!

A rational tax policy would include such things as re-instituting taxation of dividends (20% of the population own 90% of the stocks), a higher gas/carbon tax, tax benefits for establishing alternative energy and recycling programs, more incentives to save towards retirement and many more.

As for a National Health System: look at Canada or just about any other (non-"socialist") country that has one. I believe that Security, Health and Education are basic public needs that should be provided to each and every member of any civilized society. It's good business, just like building "free"ways made perfect business sense, besides fulfilling defence needs.

Finally, I firmly believe that individuals as single units cannot even survive, let alone prosper and develop. The "public" good is absolutely necessary for the "private" good. And this is even more necessary today, the dawning of The Age of Less (energy, resources, food, water, habitable space, clement weather...)

>>> "a social pyromaniac with a craving for ritualistic auto-da-fe's"?

>>> "Like Torquemada running the Jews out of Spain"?

Sounded to me like you wanted Bush's head to be cut off.

Then you say:

>>> "From the flood of debt that drowns 90% of the people..."

That's Bush's fault too??

No, my friend, Mr. "Hellasious," people will be blaming YOU for that. YOU and people of YOUR ilk.

It's YOU and YOUR FRIENDS who will be blamed for predatory lending.

It's YOU who tricked people with low teaser rates, took your percentage on the loan, then got out of town before the teaser rates ended.

It's YOU who defrauded the mortgage lender by inflating the home appraisal, so that you could get a larger commission or even a kickback.

It's YOU who convinced people that there's plenty of money around, so it's OK to run up credit card debt.

It's YOU who protected your assets from a crash, while telling people that the stock market can only go up, so you can keep getting your commissions.

It's YOU who perpetrated the greatest Ponzi scheme the world has ever known by selling $600 trillion of derivatives that are worth no more than the paper they're printed on.

Yes, my friend, YOU'RE the social pyromaniac, the fiscal terrorist, the new Drexel raping the new Enrons.

As I like to mention from time to time on my web site as advice to financial managers and advisors: I suggest that you'd better have your underground bunker picked out, because when the crash comes, your former clients are going to be coming after you, and the guillotine is going to seem mild compared to the punishment that they're going to want to inflict on you.

Sincerely,

John

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To "Hog Master":

Morons like you, who don't even have the guts to sign your name, are much too stupid to have the vaguest clue about what I support and don't support.

Sincerely,

John

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To François:

It's easy to prove, using the mathematics of Computation and Complexity Theory, that controlled, regulated economies only work for relatively small populations. As the population grows, the number of "regulators" grows exponentially faster than the population, and so either the government regulates less or it collapses. Thus, "laissez-faire" is a mathematical imperative, not an ideology. We Anglo-Saxons evidently understand that, but the people of France are learning it the hard way, aren't you? At least Sarkozy seems to get it.

A democratic society is by definition collective. If by "freedom" you mean the extreme individualism of anarchy, then you are absolutely right, I am totally against that.

One thing I was trying to underscore in my "Sunday sermon" was the profound neo-con political swing from societal concerns to individual laissez-faire. The latter has a serious practical problem: in order to profit from laissez-faire a functioning society is absolutely necessary. Ayn Rand type societies are complete fiction, when the planet has reached 6.5 billion tightly-packed souls.

Now that there are so many of us, now that climate, resource and geopolitical pressures are increasing by the day, NOW is the time to go solo? It is illogical. Maybe it can be done in the wilds of Montana or in the Gobi Desert, but I assure you it cannot be done where 90% of the world's population lives.

About Me

I was educated as a chemical engineer but spent almost my entire career in finance, particularly in money, FX and bond markets. The name stands for Hell-as-IOUs and the picture points to Quixotic endeavors.